* Dollar/yen hands back big chunk of gains made after BOJ easing
* Oil's retreat takes focus away from central bank policies
* Euro supported by risk aversion as U.S. yields decline
* Canadian, Australian dollars on defensive as oil weakens (Updates prices, adds comments)
By Shinichi Saoshiro and Masayuki Kitano
TOKYO/SINGAPORE, Feb 3 (Reuters) - The yen edged higher against the dollar on Wednesday as falling oil prices sparked an investor flight into safer assets, driving down U.S. debt yields to 10-month lows and dulling the greenback's appeal.
The dollar fell 0.3 percent to 119.64 yen JPY= , pulling away from a six-week high of 121.70 yen set on Friday after the Bank of Japan stunned the markets by adopting a negative interest rate policy.
But oil prices have since resumed declining, shaking equity markets and bringing investors' focus back to global growth woes.
"Since China growth concerns began shaking the markets in August, the broad theme has been central banks versus global risk," said Shin Kadota, chief Japan FX strategist at Barclays (L:BARC) in Tokyo.
"The yen benefited from the latest round of 'risk off'. The euro, which gained as U.S. yields fell, has also become a sort of safe-haven since August. I don't see China woes subsiding soon and the central bank versus global risk theme could play out indefinitely."
The euro eased 0.1 percent to $1.0915 EUR= , but was still up around 0.8 percent so far this week.
The 10-year U.S. Treasury yield US10YT=RR fell to 1.828 percent at one point on Wednesday, the lowest since April 2015.
Such falls in U.S. yields amid concerns about slowing U.S. economic growth and growing investor doubts about how much the Federal Reserve can raise interest rates this year have posed headwinds for the dollar.
Still, the Bank of Japan's foray into negative interest rates may eventually trigger capital flows that lend support to the dollar against the yen, market participants say.
With many Japanese government bond yields now in negative territory, global FX reserve managers may shift some of their holdings into the dollar and away from the yen, said Jesper Bargmann, head of trading for Nordea Bank in Singapore.
"A lot of sovereign reserves are in yen, and they might want to consider shifting out of yen... In many of these boardrooms there's an opposition to hold too much currencies with negative yield," Bargmann said.
In the wake of the BOJ's surprise move, Japanese government bonds with maturities of up to eight years are now being quoted with negative yields. 0#JPBMK=
"We definitely saw a shift away from the euro and in favour of the yen before and now we may see a move away from the yen," said Bargmann, referring to the possibility of reserve diversification over the next three to six months.
The latest drop in oil dampened commodity currencies, although the New Zealand dollar rose after a strong jobs report.
A surprise drop in New Zealand's unemployment rate to more than six-year lows and comments from the central bank governor added to views that New Zealand's central bank is likely to leave interest rates unchanged in March. New Zealand dollar rose 0.5 percent to $0.6544 NZD=D3 , outperforming against the Australian dollar, which fell 0.3 percent against the U.S. dollar to $0.7015 AUD=D3 .
The Aussie remained on the defensive after sliding 1 percent on Tuesday when the Reserve Bank of Australia stood pat on monetary policy but left the door open to future easing.
The weakness in oil prices weighed on the Canadian dollar, with the U.S. dollar rising 0.3 percent to C$1.4093 CAD=D3 .
Brent crude LCOc1 was down 0.5 percent in Asia on Wednesday after sliding 4.4 percent on Tuesday. (Editing by Kim Coghill)